Intrinsic value of Delphi Automotive - DLPH

Previous Close

$94.10

  Intrinsic Value

$96.04

stock screener

  Rating & Target

hold

+2%

  Value-price divergence*

+52%

Previous close

$94.10

 
Intrinsic value

$96.04

 
Up/down potential

+2%

 
Rating

hold

 
Value-price divergence*

+52%

*Intrinsic value change (in %) minus stock price change (in %) in the past 12 months.

We calculate the intrinsic value of DLPH stock by summing up the current values of future distributable cash flows generated by the company and dividing the sum by the number of outstanding shares. As such, the intrinsic value calculation depends entirely on projections. The more accurate your projections of the company's performance are - the more reliable is the intrinsic value calculation result. Please make sure to check the stock valuation input data below and adjust it if necessary. The quality of the output (intrinsic valuation result) is only as good as the quality of the input. See also DISCLAIMERS.

STOCK VALUATION INPUT DATA

Revenue (in 2016), $M
Initial revenue growth rate, %
Terminal revenue growth rate, %
Revenue decline factor
Initial discount rate, %
Discount rate multiplier
Variable cost ratio, %
Fixed operating expenses, $M
Interest rate on debt, %
Effective corporate tax rate, %
Production assets / Revenue, %
Life of production assets, yrs
Working capital / Revenue, %
Revenue / Adjusted assets
Adjusted equity ratio
Cash flow adjustment, % of Revenue
Book value of equity, $M
Shares outstanding, mln
Market capitalization, $bln 25.0

 

FINANCIAL STATEMENTS FORECAST and PRESENT VALUE CALCULATION

Fiscal year
2016(a)
   2017
   2018
   2019
   2020
   2021
   2022
   2023
   2024
   2025
   2026
   2027
   2028
   2029
   2030
   2031
   2032
   2033
   2034
   2035
   2036
   2037
   2038
   2039
   2040
   2041
   2042
   2043
   2044
   2045
   2046

INCOME STATEMENT

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenue growth rate, %
  9.86
  5.90
  5.81
  5.73
  5.66
  5.59
  5.53
  5.48
  5.43
  5.39
  5.35
  5.31
  5.28
  5.25
  5.23
  5.21
  5.19
  5.17
  5.15
  5.14
  5.12
  5.11
  5.10
  5.09
  5.08
  5.07
  5.06
  5.06
  5.05
  5.05
  5.04
Revenue, $m
  16,661
  17,644
  18,669
  19,739
  20,855
  22,021
  23,239
  24,512
  25,843
  27,236
  28,692
  30,217
  31,813
  33,485
  35,236
  37,070
  38,992
  41,007
  43,119
  45,333
  47,655
  50,089
  52,643
  55,322
  58,132
  61,081
  64,174
  67,420
  70,826
  74,401
  78,153
Variable operating expenses, $m
 
  14,689
  15,533
  16,414
  17,334
  18,295
  19,299
  20,348
  21,444
  22,592
  23,792
  24,897
  26,212
  27,590
  29,032
  30,544
  32,127
  33,787
  35,528
  37,352
  39,265
  41,271
  43,375
  45,583
  47,898
  50,327
  52,876
  55,551
  58,357
  61,303
  64,394
Fixed operating expenses, $m
 
  956
  980
  1,005
  1,030
  1,056
  1,082
  1,109
  1,137
  1,165
  1,194
  1,224
  1,255
  1,286
  1,318
  1,351
  1,385
  1,420
  1,455
  1,492
  1,529
  1,567
  1,606
  1,646
  1,688
  1,730
  1,773
  1,817
  1,863
  1,909
  1,957
Total operating expenses, $m
  14,787
  15,645
  16,513
  17,419
  18,364
  19,351
  20,381
  21,457
  22,581
  23,757
  24,986
  26,121
  27,467
  28,876
  30,350
  31,895
  33,512
  35,207
  36,983
  38,844
  40,794
  42,838
  44,981
  47,229
  49,586
  52,057
  54,649
  57,368
  60,220
  63,212
  66,351
Operating income, $m
  1,874
  1,999
  2,156
  2,319
  2,491
  2,670
  2,858
  3,056
  3,262
  3,479
  3,706
  4,096
  4,346
  4,609
  4,885
  5,175
  5,480
  5,800
  6,136
  6,489
  6,861
  7,251
  7,662
  8,093
  8,547
  9,024
  9,525
  10,052
  10,606
  11,189
  11,802
EBITDA, $m
  2,578
  2,655
  2,840
  3,035
  3,238
  3,451
  3,674
  3,907
  4,152
  4,409
  4,678
  4,960
  5,256
  5,567
  5,893
  6,235
  6,595
  6,972
  7,369
  7,786
  8,224
  8,684
  9,167
  9,675
  10,209
  10,770
  11,360
  11,980
  12,632
  13,317
  14,037
Interest expense (income), $m
  145
  143
  163
  185
  208
  232
  257
  283
  310
  338
  368
  399
  431
  465
  501
  538
  578
  618
  661
  707
  754
  803
  855
  910
  967
  1,027
  1,090
  1,156
  1,225
  1,297
  1,374
Earnings before tax, $m
  1,425
  1,857
  1,992
  2,134
  2,283
  2,439
  2,602
  2,773
  2,953
  3,141
  3,338
  3,697
  3,915
  4,143
  4,384
  4,637
  4,902
  5,181
  5,474
  5,783
  6,107
  6,448
  6,806
  7,183
  7,580
  7,997
  8,435
  8,897
  9,382
  9,892
  10,428
Tax expense, $m
  242
  501
  538
  576
  616
  658
  703
  749
  797
  848
  901
  998
  1,057
  1,119
  1,184
  1,252
  1,324
  1,399
  1,478
  1,561
  1,649
  1,741
  1,838
  1,940
  2,047
  2,159
  2,278
  2,402
  2,533
  2,671
  2,816
Net income, $m
  1,257
  1,355
  1,455
  1,558
  1,667
  1,780
  1,899
  2,024
  2,155
  2,293
  2,437
  2,699
  2,858
  3,025
  3,200
  3,385
  3,578
  3,782
  3,996
  4,221
  4,458
  4,707
  4,969
  5,244
  5,533
  5,838
  6,158
  6,494
  6,849
  7,221
  7,613

BALANCE SHEET

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and short-term investments, $m
  838
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Total assets, $m
  12,292
  12,126
  12,831
  13,566
  14,333
  15,135
  15,972
  16,847
  17,762
  18,719
  19,720
  20,768
  21,865
  23,014
  24,217
  25,478
  26,799
  28,183
  29,635
  31,157
  32,752
  34,426
  36,181
  38,022
  39,953
  41,980
  44,106
  46,337
  48,678
  51,135
  53,713
Adjusted assets (=assets-cash), $m
  11,454
  12,126
  12,831
  13,566
  14,333
  15,135
  15,972
  16,847
  17,762
  18,719
  19,720
  20,768
  21,865
  23,014
  24,217
  25,478
  26,799
  28,183
  29,635
  31,157
  32,752
  34,426
  36,181
  38,022
  39,953
  41,980
  44,106
  46,337
  48,678
  51,135
  53,713
Revenue / Adjusted assets
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
  1.455
Average production assets, $m
  4,758
  5,046
  5,339
  5,645
  5,965
  6,298
  6,646
  7,010
  7,391
  7,789
  8,206
  8,642
  9,099
  9,577
  10,077
  10,602
  11,152
  11,728
  12,332
  12,965
  13,629
  14,326
  15,056
  15,822
  16,626
  17,469
  18,354
  19,282
  20,256
  21,279
  22,352
Working capital, $m
  1,271
  476
  504
  533
  563
  595
  627
  662
  698
  735
  775
  816
  859
  904
  951
  1,001
  1,053
  1,107
  1,164
  1,224
  1,287
  1,352
  1,421
  1,494
  1,570
  1,649
  1,733
  1,820
  1,912
  2,009
  2,110
Total debt, $m
  3,971
  4,533
  5,140
  5,774
  6,435
  7,126
  7,848
  8,602
  9,391
  10,215
  11,078
  11,982
  12,927
  13,918
  14,955
  16,042
  17,180
  18,374
  19,625
  20,937
  22,312
  23,755
  25,268
  26,855
  28,520
  30,267
  32,099
  34,022
  36,040
  38,158
  40,381
Total liabilities, $m
  9,891
  10,453
  11,060
  11,694
  12,355
  13,046
  13,768
  14,522
  15,311
  16,135
  16,998
  17,902
  18,847
  19,838
  20,875
  21,962
  23,100
  24,294
  25,545
  26,857
  28,232
  29,675
  31,188
  32,775
  34,440
  36,187
  38,019
  39,942
  41,960
  44,078
  46,301
Total equity, $m
  2,401
  1,673
  1,771
  1,872
  1,978
  2,089
  2,204
  2,325
  2,451
  2,583
  2,721
  2,866
  3,017
  3,176
  3,342
  3,516
  3,698
  3,889
  4,090
  4,300
  4,520
  4,751
  4,993
  5,247
  5,514
  5,793
  6,087
  6,394
  6,718
  7,057
  7,412
Total liabilities and equity, $m
  12,292
  12,126
  12,831
  13,566
  14,333
  15,135
  15,972
  16,847
  17,762
  18,718
  19,719
  20,768
  21,864
  23,014
  24,217
  25,478
  26,798
  28,183
  29,635
  31,157
  32,752
  34,426
  36,181
  38,022
  39,954
  41,980
  44,106
  46,336
  48,678
  51,135
  53,713
Debt-to-equity ratio
  1.654
  2.710
  2.900
  3.080
  3.250
  3.410
  3.560
  3.700
  3.830
  3.950
  4.070
  4.180
  4.280
  4.380
  4.470
  4.560
  4.650
  4.720
  4.800
  4.870
  4.940
  5.000
  5.060
  5.120
  5.170
  5.220
  5.270
  5.320
  5.370
  5.410
  5.450
Adjusted equity ratio
  0.136
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138
  0.138

CASH FLOW

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net income, $m
  1,257
  1,355
  1,455
  1,558
  1,667
  1,780
  1,899
  2,024
  2,155
  2,293
  2,437
  2,699
  2,858
  3,025
  3,200
  3,385
  3,578
  3,782
  3,996
  4,221
  4,458
  4,707
  4,969
  5,244
  5,533
  5,838
  6,158
  6,494
  6,849
  7,221
  7,613
Depreciation, amort., depletion, $m
  704
  655
  685
  715
  747
  781
  815
  852
  890
  930
  971
  864
  910
  958
  1,008
  1,060
  1,115
  1,173
  1,233
  1,297
  1,363
  1,433
  1,506
  1,582
  1,663
  1,747
  1,835
  1,928
  2,026
  2,128
  2,235
Funds from operations, $m
  1,969
  2,011
  2,139
  2,273
  2,414
  2,561
  2,715
  2,876
  3,045
  3,223
  3,408
  3,563
  3,768
  3,982
  4,208
  4,445
  4,694
  4,955
  5,230
  5,518
  5,821
  6,140
  6,474
  6,826
  7,196
  7,585
  7,993
  8,423
  8,874
  9,349
  9,848
Change in working capital, $m
  28
  27
  28
  29
  30
  31
  33
  34
  36
  38
  39
  41
  43
  45
  47
  50
  52
  54
  57
  60
  63
  66
  69
  72
  76
  80
  84
  88
  92
  97
  101
Cash from operations, $m
  1,941
  1,984
  2,112
  2,245
  2,384
  2,529
  2,682
  2,842
  3,009
  3,185
  3,369
  3,522
  3,724
  3,937
  4,161
  4,395
  4,642
  4,901
  5,173
  5,458
  5,758
  6,074
  6,405
  6,754
  7,120
  7,505
  7,910
  8,335
  8,782
  9,252
  9,746
Maintenance CAPEX, $m
  0
  -476
  -505
  -534
  -565
  -596
  -630
  -665
  -701
  -739
  -779
  -821
  -864
  -910
  -958
  -1,008
  -1,060
  -1,115
  -1,173
  -1,233
  -1,297
  -1,363
  -1,433
  -1,506
  -1,582
  -1,663
  -1,747
  -1,835
  -1,928
  -2,026
  -2,128
New CAPEX, $m
  -828
  -289
  -293
  -306
  -319
  -333
  -348
  -364
  -381
  -398
  -417
  -436
  -457
  -478
  -501
  -525
  -550
  -576
  -604
  -633
  -664
  -696
  -730
  -766
  -804
  -843
  -885
  -928
  -974
  -1,022
  -1,073
Cash from investing activities, $m
  -578
  -765
  -798
  -840
  -884
  -929
  -978
  -1,029
  -1,082
  -1,137
  -1,196
  -1,257
  -1,321
  -1,388
  -1,459
  -1,533
  -1,610
  -1,691
  -1,777
  -1,866
  -1,961
  -2,059
  -2,163
  -2,272
  -2,386
  -2,506
  -2,632
  -2,763
  -2,902
  -3,048
  -3,201
Free cash flow, $m
  1,363
  1,220
  1,314
  1,405
  1,500
  1,600
  1,704
  1,813
  1,928
  2,048
  2,174
  2,265
  2,404
  2,549
  2,702
  2,863
  3,032
  3,209
  3,396
  3,592
  3,798
  4,015
  4,242
  4,482
  4,734
  4,999
  5,278
  5,571
  5,880
  6,204
  6,546
Issuance/(repayment) of debt, $m
  -44
  574
  607
  634
  661
  691
  722
  754
  789
  825
  863
  903
  946
  990
  1,037
  1,087
  1,139
  1,194
  1,251
  1,312
  1,375
  1,443
  1,513
  1,587
  1,665
  1,747
  1,833
  1,923
  2,018
  2,118
  2,223
Issuance/(repurchase) of shares, $m
  -634
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash from financing (excl. dividends), $m  
  -764
  574
  607
  634
  661
  691
  722
  754
  789
  825
  863
  903
  946
  990
  1,037
  1,087
  1,139
  1,194
  1,251
  1,312
  1,375
  1,443
  1,513
  1,587
  1,665
  1,747
  1,833
  1,923
  2,018
  2,118
  2,223
Total cash flow (excl. dividends), $m
  576
  1,794
  1,921
  2,038
  2,161
  2,290
  2,425
  2,567
  2,716
  2,872
  3,037
  3,168
  3,349
  3,540
  3,740
  3,950
  4,171
  4,403
  4,647
  4,904
  5,173
  5,457
  5,755
  6,069
  6,399
  6,746
  7,111
  7,494
  7,898
  8,322
  8,768
Retained Cash Flow (-), $m
  -151
  -98
  -97
  -101
  -106
  -111
  -116
  -121
  -126
  -132
  -138
  -145
  -151
  -159
  -166
  -174
  -182
  -191
  -200
  -210
  -220
  -231
  -242
  -254
  -267
  -280
  -293
  -308
  -323
  -339
  -356
Prev. year cash balance distribution, $m
 
  826
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash flow adjustment, $m
 
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
  0
Cash available for distribution, $m
 
  2,521
  1,824
  1,937
  2,055
  2,180
  2,310
  2,447
  2,590
  2,740
  2,898
  3,024
  3,198
  3,381
  3,574
  3,776
  3,988
  4,212
  4,447
  4,694
  4,953
  5,226
  5,513
  5,815
  6,132
  6,466
  6,817
  7,186
  7,575
  7,983
  8,412
Discount rate, %
 
  5.30
  5.57
  5.84
  6.14
  6.44
  6.76
  7.10
  7.46
  7.83
  8.22
  8.63
  9.06
  9.52
  9.99
  10.49
  11.02
  11.57
  12.15
  12.76
  13.39
  14.06
  14.77
  15.50
  16.28
  17.09
  17.95
  18.85
  19.79
  20.78
  21.82
PV of cash for distribution, $m
 
  2,394
  1,637
  1,634
  1,620
  1,595
  1,560
  1,513
  1,457
  1,390
  1,315
  1,216
  1,129
  1,037
  942
  845
  749
  655
  565
  480
  401
  330
  266
  211
  164
  125
  93
  68
  48
  33
  23
Current shareholders' claim on cash, %
  100
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0
  100.0

Delphi Automotive PLC, together with its subsidiaries, manufacturers vehicle components; and provides electrical and electronic, powertrain, and safety technology solutions to the automotive and commercial vehicle markets worldwide. It operates through three segments: Electrical/Electronic Architecture, Powertrain Systems, and Electronics and Safety. The Electrical/Electronic Architecture segment offers complete design of the vehicle’s electrical architecture, including connectors, wiring assemblies and harnesses, electrical centers, and hybrid high voltage and safety distribution systems. The Powertrain Systems segment offers systems integration of end-to-end gasoline and diesel engine management systems comprising fuel handling, fuel injection, combustion, electronic controls, test and validation capabilities, electric and hybrid electric vehicle power electronics, aftermarket, and original equipment services. The Electronics and Safety segment provides critical components, systems, and software for passenger safety, security, comfort, and infotainment, as well as vehicle operation consisting of body controls, infotainment and connectivity systems, passive and active safety electronics, autonomous driving technologies and displays. This segment also develops software. The company sells its products to the original equipment manufacturers (OEMs); and aftermarket for replacement parts, including the aftermarket operations of its OEM customers, as well as to other distributors and retailers. Delphi Automotive PLC is based in Gillingham, the United Kingdom.

FINANCIAL RATIOS  of  Delphi Automotive (DLPH)

Valuation Ratios
P/E Ratio 20.2
Price to Sales 1.5
Price to Book 10.6
Price to Tangible Book
Price to Cash Flow 13.1
Price to Free Cash Flow 22.8
Growth Rates
Sales Growth Rate 9.9%
Sales - 3 Yr. Growth Rate %
EPS Growth Rate %
EPS - 3 Yr. Growth Rate %
Capital Spending Gr. Rate 17.6%
Cap. Spend. - 3 Yr. Gr. Rate 6.5%
Financial Strength
Quick Ratio 70
Current Ratio 0
LT Debt to Equity 164.9%
Total Debt to Equity 165.4%
Interest Coverage 11
Management Effectiveness
Return On Assets 11.4%
Ret/ On Assets - 3 Yr. Avg. 12.7%
Return On Total Capital 19.9%
Ret/ On T. Cap. - 3 Yr. Avg. 24%
Return On Equity 54.1%
Return On Equity - 3 Yr. Avg. 54.9%
Asset Turnover 1.4
Profitability Ratios
Gross Margin 21.3%
Gross Margin - 3 Yr. Avg. 20.2%
EBITDA Margin 13.6%
EBITDA Margin - 3 Yr. Avg. 14.2%
Operating Margin 11.2%
Oper. Margin - 3 Yr. Avg. 11%
Pre-Tax Margin 8.6%
Pre-Tax Margin - 3 Yr. Avg. 9.6%
Net Profit Margin 7.5%
Net Profit Margin - 3 Yr. Avg. 8.6%
Effective Tax Rate 17%
Eff/ Tax Rate - 3 Yr. Avg. 16.7%
Payout Ratio 25.2%

DLPH stock valuation input parameters

Revenue. Company's revenue (or sales) is always the starting point of any cash flow forecast. In the DLPH stock intrinsic value calculation we used $16661 million for the last fiscal year's total revenue generated by Delphi Automotive. The default revenue input number comes from 2016 income statement of Delphi Automotive. You may change it if you feel that it should be adjusted for some unusual circumstances that are not expected to be repeated in the future or if you already know (from interim financial statements, for example) that this year's revenue is going to be quite different.

Revenue growth rate. Forecasted future revenue growth rate is the most important input parameter for the intrinsic value calculation. Unlike other input parameters that are reasonably expected to be in line with their historic averages or their historic trends, the revenue growth rate by and large is a wild card: nobody really knows what the company's revenue will be in the future. Of course, the level of unpredictability is different for different industries (utility companies being the most predictable and, thus, less risky).
    We use three input parameters to forecast the revenue growth rate in our DLPH stock valuation model: a) initial revenue growth rate of 5.9% whose default value is the revenue growth rate in the most recent quarter compared to the quarterly revenue a year ago; b) terminal revenue growth rate of 5% whose default value is chosen to be close to the average nominal (i.e. not adjusted for inflation) GDP growth rate; and c) revenue decline factor of 0.9, which stipulates that revenue growth rate in each forecasted year will be equal to the difference of the revenue growth rate in the preceding year and the terminal revenue growth rate multiplied by this revenue decline factor (with the passage of time the revenue growth rate will be approaching the terminal revenue growth rate, but not quite reaching it - though the difference could be infinitesimally small).
    At the revenue decline factor of 1, the future revenue growth rate is forecasted to be constant and equal to the initial revenue growth rate. The smaller the revenue decline factor, the faster the revenue growth rate will approach the terminal revenue growth.

Discount rate. The discount rate is used for determining the present value of future cash flows: future cash flows are "discounted" as at normal conditions (that translate into positive expected return on investment) one dollar today is worth more than the same dollar in the future. Unlike all other valuation models, we use variable discount rate, i.e. it increases for each consecutive year. This is done to account for higher risk of cash flows coming in further in the future.
    The initial discount rate of 5.3%, whose default value for DLPH is calculated based on our internal credit rating of Delphi Automotive, is applied to the cash flow expected to be received a year from now (well, actually, to be precise, in the financial year following the base year - the last year for which we have financial statements). For each consecutive year the discount rate is multiplied by the discount rate multiplier of 1.05, e.i. each year it increases by 5%. Feel free to change this number to correspond to your level of risk assessment of Delphi Automotive.
    By the way, it is easy to set the discount rate to be constant (this would make comparison with other valuation models easier): just set the discount rate multiplier equal to 1 and chose the magnitude of the initial discount rate to your liking.

Variable cost ratio is the ratio of variable costs (i.e. costs that fluctuate with fluctuation of the volume of production) to the revenue expressed as a percentage. In the calculation of intrinsic value of DLPH stock the variable cost ratio is equal to 83.3%.

Fixed operating expenses is just that - expenses that are not dependant on the volume of production. They are set to $933 million in the base year in the intrinsic value calculation for DLPH stock. These expenses increase with the level of inflation in subsequent years.

Interest rate on debt is the average all-in rate of interest paid by the company on its debt. It is set at 3.6% for Delphi Automotive.

Corporate tax rate of 27% is the nominal tax rate for Delphi Automotive. In reality, companies find ways to pay much less taxes than that or not to pay them at all.

Cash flow adjustment could be used for any adjustment the investor deems necessary. Most commonly we use this field to account for stock options-related effects in excess of what is reported on the company's income statement. The cash flow adjustment is expressed as a percentage of the revenue, and in the current valuation of the DLPH stock is equal to 0%.

Production assets are the company's assets used for manufacturing products or provision of services. In the valuation model input table they are expressed as a percentage of revenue and for DLPH are equal to 28.6%.

Life of production assets of 10 years is the average useful life of capital assets used in Delphi Automotive operations. It is used to calculate yearly capital expenditures needed to keep these assets in good order - we call it the maintenance CAPEX.

Working capital is the difference between the company's current assets and liabilities. In the model we use the ratio of working capital to revenue, which for DLPH is equal to 2.7%. A negative number means that the company is apt at using financial resources of its suppliers and customers; a large positive number, on the other hand, means that it either provides in-kind financing to others or is not good at managing its inventories.

Book value of equity - $2401 million for Delphi Automotive - is used in calculation of the "floor" for intrinsic valuation based on the discounted cash flow (DCF) method. Even if the prospects are very bad for a company, its assets could always be sold now for their current fair market value.

Shares outstanding of 265.859 million for Delphi Automotive is needed to calculate the intrinsic value of one share.

Market capitalization is used here only for reference purposes and as a quick check that the share price and the number of shares outstanding numbers are correct - something especially to be cognizant about at stock splits. So, the market capitalization of Delphi Automotive at the current share price and the inputted number of shares is $25.0 billion.

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COMPANY NEWS

▶ More Consumer Sector Earnings Results from Last Week   [Aug-09-17 09:31AM  Market Realist]
▶ Delphi Automotive beats Street 2Q forecasts   [Aug-02-17 09:22PM  Associated Press]
▶ Delphi Declares Quarterly Dividend   [Jul-27-17 04:15PM  PR Newswire]
▶ Delphi to Present at Jefferies Industrials Conference   [Jul-21-17 09:00AM  PR Newswire]
▶ Self-Driving Alliances Multiply: Nvidia, Baidu Deepen Their AI Pact   [Jul-05-17 04:06PM  Investor's Business Daily]
▶ Intel Is Undervalued   [Jun-22-17 04:49PM  GuruFocus.com]
▶ How Delphi Can Boost Intel's Self-Driving Ambitions   [Jun-20-17 02:18PM  Motley Fool]
▶ [$$] Scurria's Take: Feds Appeal to Keep GM Bailout Records Sealed   [Jun-14-17 03:17PM  The Wall Street Journal]
▶ Automotive Industry News, Self-Driving Cars And Stocks To Watch   [Jun-13-17 03:21PM  Investor's Business Daily]
▶ Delphi To Use Mobileye Tech In Self-Driving Taxi Pact   [04:16PM  Investor's Business Daily]
▶ Electric Car Boom On Hold As Key Ingredient Vanishes   [May-31-17 07:30PM  Oilprice.com]
▶ 3 Top Auto Stocks to Buy in 2017   [May-24-17 06:08PM  Motley Fool]
▶ Delphi Automotive Hits the Accelerator   [May-08-17 01:52PM  TheStreet.com]
▶ Today's Top Supply Chain and Logistics News From WSJ   [06:38AM  The Wall Street Journal]
▶ Tesla Has An Oracle But Consider Delphi   [May-03-17 06:56PM  Bloomberg]
▶ Delphi Sharpens Focus on Self-Driving Cars   [03:14PM  The Wall Street Journal]
▶ Autos: Is It Really That Bad?   [02:09PM  Barrons.com]
▶ US STOCKS-Apple drags Wall St lower   [09:48AM  Reuters]
Stock chart of DLPH Financial statements of DLPH
Valuation of Stocks

The paper VALUATION OF STOCKS: The Quest for Intrinsic Value provides a detailed description of our valuation model and discloses the calculation algorithm.

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